Just curious -- why would choose VTI over VTSMX or VTSAX? I could see buying VTI only until you have enough invested to switch over to VTSMX ($3,000), then VTSAX once you have $10k.

At $400/month you could buy VTI for your first 8 months, then convert to VTSMX once you reach the minimum investment threshold of $3k. About a year and a half later, not including any market gains or losses, you'd have $10k invested and be able to convert to VTSAX which is the same as the other two, but with the lowest expenses and the highest minimum investment threshold ($10k).

I just made the move to Vanguard myself. I have VTSAX in accounts that I have $10K in. Otherwise I start at VTI and I think it automatically moves over to the other funds one there is enough. But yes I agree, if you have $10K, then VTSAX is the way to go.

I just made the move to Vanguard myself. I have VTSAX in accounts that I have $10K in. Otherwise I start at VTI and I think it automatically moves over to the other funds one there is enough. But yes I agree, if you have $10K, then VTSAX is the way to go.

Gotcha, thanks for the explanation. Just wanted to make sure I wasn't missing any useful knowledge. Cheers! :D

I just made the move to Vanguard myself. I have VTSAX in accounts that I have $10K in. Otherwise I start at VTI and I think it automatically moves over to the other funds one there is enough. But yes I agree, if you have $10K, then VTSAX is the way to go.

Vanguard doesn't convert ETFs to Mutual funds. You would have to sell VTI reinvest in VTSAX. Not something you would necessarily want to do since it is in a taxable account. Doing this route until you had the $3k for VTSMX would potentially have less of a tax impact as it would only take 8 months at $400/month to reach $3k. IMO if you have a set amount you want to invest each month then the Funds are better than the ETFs as you can only purchase ETFs in individual shares leaving some of that amount not invested.

Thanks very much!!So if I have 3k to start with, I should start with VTSMX directly. And once I have the 10k earlier next year, I move all the funds to VTSAX? Or do you recommend waiting for the next 3-4 months and accumulate the 10k and then invest directly in VTSAX?

Just curious -- why would choose VTI over VTSMX or VTSAX? I could see buying VTI only until you have enough invested to switch over to VTSMX ($3,000), then VTSAX once you have $10k.

At $400/month you could buy VTI for your first 8 months, then convert to VTSMX once you reach the minimum investment threshold of $3k. About a year and a half later, not including any market gains or losses, you'd have $10k invested and be able to convert to VTSAX which is the same as the other two, but with the lowest expenses and the highest minimum investment threshold ($10k).

I just made the move to Vanguard myself. I have VTSAX in accounts that I have $10K in. Otherwise I start at VTI and I think it automatically moves over to the other funds one there is enough. But yes I agree, if you have $10K, then VTSAX is the way to go.

Vanguard doesn't convert ETFs to Mutual funds. You would have to sell VTI reinvest in VTSAX. Not something you would necessarily want to do since it is in a taxable account. Doing this route until you had the $3k for VTSMX would potentially have less of a tax impact as it would only take 8 months at $400/month to reach $3k. IMO if you have a set amount you want to invest each month then the Funds are better than the ETFs as you can only purchase ETFs in individual shares leaving some of that amount not invested.

Great point!

To answer your question: if you already have $3k, then put that into VTSMX instead of VTI. You'd have to sell VTI once you reach $3k and pay taxes on any capital gains from the transaction (or bank some losses to offset your tax bill at the end of the year depending on what the market does). You can convert VTSMX to VTSAX without having to buy/sell anything. It will either happen automatically after you hit $10k, or you'll have the option when you click on "Balances and Holdings" once you've met the balance requirements. I manually had to convert mine, which was painless and exciting.

As one commenter brilliantly pointed out, VTI also does not let you buy partial shares, so if you invest exactly $400 per month you'll have some subset of that sitting in your account until next month when you can combine your next $400 plus that subset into more shares. It's messier and less efficient. Considering the fact that VTI is $135.45 per share as of today, you'd be able to buy a whopping two shares for $270.90 and have the other $129.10 sitting in your money market fund until next month when you could combine it with your $400, making $529.10. In that month you'd buy 3 shares and have $122.75 left over in month 2.

Does anyone know if Vanguard charges a commission/trade fee for buying VTI? I know it is free to buy Vanguard mutual funds through them, but I'm not sure about shares.

IMO VTI Is for newer folks just starting out, wanting to ease their way into investing, or not willing to make a $3k/$10k investment.

Let me also stress that once you've cleared the $3k or $10k mark you can buy as much or as little as you want from that point forward. $50 here, $300 there, your $400/month etc. There's no minimum subsequent investment after that, albeit the lowest increment I've done is $200.

VTI is a good balanced blend. If you aren't able to purchase VTI direct through Vanguard without a fee, you can open an account with TD Ameritrade and sign up for commission-free ETFs. There is no cost for signing up. Then you can do your monthly purchase through them with no fee.

I would imagine other investment companies do the commission-free ETF program but know for sure that TD Ameritrade does it without a hassle. Opening an account on-line takes about 10 minutes.

Thank you everyone for your valuable feedback. I went ahead and opened the Vanguard account and invested $3000 in VTSMX. Starting November, I will do a monthly investment of approx. $400 and take it from there.

Do you get a 529 tax deduction in your state? How much would it be worth? Another poster pointed out that with the deduction, the 529 was comparable in quality to investing in a HSA, and the penalties if you end up not using it for education were pretty minor.

Essentially, if you withdraw the accumulated income (not the original contributions), and use it for something not considered a higher education cost, you have a 10% penalty on that income. But it grew tax free for many, many years, so may be a wash. You could also take that money and top off your 401k, and get the tax deduction there (if you don't always max out your plans, this is a great benefit).

Currently, there are 327 foreign schools that are qualified as 529 institutions. It appears pretty easy to find a way to spend eligible dollars on IT equipment and room and board for the student, (money does not go to the institution) as long as they are enrolled. The biggest risk is if the student NEVER goes to college, and then the risk is a 10% penalty on the income (that grew tax free for many years).

Thank you everyone for your valuable feedback. I went ahead and opened the Vanguard account and invested $3000 in VTSMX. Starting November, I will do a monthly investment of approx. $400 and take it from there.

Do you get a 529 tax deduction in your state? How much would it be worth? Another poster pointed out that with the deduction, the 529 was comparable in quality to investing in a HSA, and the penalties if you end up not using it for education were pretty minor.

I live in NJ and work in NY, haven't looked up on 529s in NJ yet.. will start researching on that as well.

Currently, there are 327 foreign schools that are qualified as 529 institutions. It appears pretty easy to find a way to spend eligible dollars on IT equipment and room and board for the student, (money does not go to the institution) as long as they are enrolled. The biggest risk is if the student NEVER goes to college, and then the risk is a 10% penalty on the income (that grew tax free for many years).

never thought about this.. that's a great tip.. I always thought that 529 is for tuition only

Do you get a 529 tax deduction in your state? How much would it be worth? Another poster pointed out that with the deduction, the 529 was comparable in quality to investing in a HSA, and the penalties if you end up not using it for education were pretty minor.

I live in NJ and work in NY, haven't looked up on 529s in NJ yet.. will start researching on that as well.

Currently, there are 327 foreign schools that are qualified as 529 institutions. It appears pretty easy to find a way to spend eligible dollars on IT equipment and room and board for the student, (money does not go to the institution) as long as they are enrolled. The biggest risk is if the student NEVER goes to college, and then the risk is a 10% penalty on the income (that grew tax free for many years).

never thought about this.. that's a great tip.. I always thought that 529 is for tuition only

Keep in mind your 529 doesn't have to be in a state you have any association with.